Canadian Manufacturing on a Slow Road to Recovery

Canadian manufacturing has been consistently low up until April, when Alberta factory sales numbers reached 10.7 percent for a total of $6.6 billion in spending – the best in the country.Although the country’s manufacturing industry has been on the decline in recent months, economists believe it’s due to a seasonal slowdown. The industry should return to normal shortly, which would provide a needed boost for the Canadian economy.

According to the Wall Street Journal, “This means manufacturers could have contributed positively to growth in gross domestic product during the month. It could also be an indication that export-oriented manufacturers are benefiting from the Canadian dollar’s decline in recent months, which makes exports cheaper in global markets.”

As the Canadian manufacturing and factory sales numbers slowly recover, weak points still exist in the petroleum and coal industries. Although, economists and Canadian officials believe these industries are not crucial to the country’s complete economic recovery.

Bloomberg notes, “The “ingredients” for a slow return to full strength include rising global demand and a lower Canadian dollar that will support exports after a harsh winter disrupted production, Bank of Canada policy makers said June 4.”

The drop in the petroleum and coal product sales numbers are likely temporary and should return to normal output after factories reopened due to previous, seasonal shutdowns. Other key indicators include a rise in inventory (by 1.1 percent) – a sign that factory sales will continue to rise.

The Wall Street Journal reports, “Economists at Bank of Nova Scotia estimate manufacturing sales volumes are tracking 3.6 percent higher in annualized terms in the second quarter versus the prior quarter. They said that supports the outlook for growth recovering in the second quarter from a weak first quarter. Canadian GDP expanded a softer-than-expected 1.2 percent in annualized terms in that period.”